INTERNATIONAL RELATIONS

What key financial ratios will be affected by the adoption of FAS 141R and FAS 160? What will be the likely effect?

The main reason behind the development of new financial recoding parameters is to fill the gap that exists between U.S GAAP and IFRS. The changes represent a positive response to the growth of multinational platforms for business that seeks to engage many countries in global business. The adoption of FAS 141R and FAS 160 marks the beginning of a new era in accounting. However, the change affects a number of financial aspects in the existing accounting system: subsidiaries’ assets and liabilities, negative goodwill, NCI valuation and in process research development. Negative goodwill, for instance, is initially identified as a proportionate reduction of long-term assets. This amounts to substantial effect on the financial ratios that are employment in financial accounting: return on assets, return on equity, return on net assets, risk adjusted return on capital, and asset turnover. The changes affect the denominator, the numerator or all the two aspects of the financial ratios…

  1. Could any of the recent and forthcoming changes affect the company’s acquisition strategies and potentially its growth?

            The forthcoming changes in accounting principles are likely to enhance the effectiveness of the company and widen its scope of operation. The baseline of the changes is to establish a common ground between U.S GAAP and IFRS.  Therefore, the company will have the ability to merge its operations with other companies that use the new accounting principle. FAS 166, “Accounting for Transfers of Financial Assets,” and FAS 167, “Amendments to FASB Interpretation NO. 46R” represent the developments in the consolidation area that will help the company expound its management competence and growth rate when implemented…

  • What were FASB’s primary reasons for issuing FAS 141R and FAS 160?

                A multinational company with subsidiaries in different regional market is always faced with the challenge of aligning their records into one comprehensive financial statement…

Order a Similar or Custom Paper from our Writers